Reaching Out

The numbers tell the story: According to the U.S. Census Bureau, there are more than 52 million Hispanics living in the United States, making people of Hispanic origin the nation's largest ethnic or race minority. The Bureau forecasts that by 2050, this demographic will number 132.8 million — or about 30% of the population. By 2015, one in three newborns will be of Latino descent. And while the overall U.S. population is getting older, the Latino community remains young: More than 60% of the U.S. Hispanic population is under 35, and 75% is under 45.

As much as the Latino population is growing, so is its buying power. By 2015, it is expected to reach $1.5 trillion, according to a study by the Selig Center for Economic Growth at the University of Georgia's Terry College of Business. A report by Nielsen, "The Hispanic Market Imperative," noted:

"If it were a standalone country, the U.S. Hispanic market buying power would make it one of the top 20 economies in the world."

Given the dramatic growth of the Hispanic market, retailers everywhere should be sitting up and taking note, argued Simon El Hage, senior VP, director of strategic planning for the Hispanic advertising agency Casanova Pendrill, which is part of Interpublic Group of Cos.

"Any retailer that does not understand that Hispanics are a highly complex culture, with regard to how they shop and what they shop, of course are going to miss the boat," El Hage said. "Retailers have to understand that this country is becoming bi-cultural."

Indeed, experts and demographers agree that the United States is on the path to ethnic plurality, largely as a result of the exploding growth of the Latino population, particularly in states like Texas, California, New Mexico, Arizona, Nevada, Florida, New Jersey, New York and Colorado. (The nation's most populous state, California, also has the largest Hispanic population, and Los Angeles County had the largest Hispanic population of any county, at 4.8 million.) It's also worth noting that those states with the highest rate of Latino growth in the 2012 Census Bureau estimates were places not normally seen as ethnic magnets, including North Dakota, South Dakota, Alaska and Montana.

Smart retailers, of course, have been marketing to Hispanics for some time. Here are a few examples:

Anna's Linens: In 1987, Alan Gladstone felt the Hispanic demographic was so underserved that he opened Anna's Linens. The Costa Mesa, Calif.-based home decor and home textiles retailer has been expanding ever since. It now operates more than 300 stores across the country, with many of the locations in Hispanic areas.

"All retailers were trading down to [Hispanic shoppers] with cheap merchandise at cheap prices," recalled Gladstone, who serves as chairman and CEO of the family-run business, "but my experience was that they wanted steak cheap, not cheap steak."

To appeal to Latino consumers, Anna's Linens makes sure its offerings parallel the preferences and tastes of the market. The stores offer a clean, cheerful shopping environment, the latest in home fashions and low prices.

"We give them an environment they can't find anywhere else, and we make the customer feel good about herself," Gladstone said.

Employees at Anna's Linens — from hourly to management employees — mirror the customer base. About half are Hispanic, which means there is someone in the stores who shoppers can relate to and who speak their own language.

"We have a lot of knowledge [about our shoppers] because we employ the people we're trying to sell to," Gladstone said.

On-target marketing is also key in appealing to Latino consumers. One of Anna's Linens' recent ad campaigns involved a parody of the popular Spanish-speaking telenovelas.

"Telenovelas are the most-watched programs by Hispanics," Gladstone said. "[Our ads] are campy and, with their take on the novela storylines, work really well in Spanish and also resonate in English."

Anna's Linens' success with Hispanic shoppers in the United States bodes well for its most recent venture: expansion into Puerto Rico. The chain opened its first store in Puerto Rico in 2012, following it up with four additional units.

Walmart: This past spring, AHAA | The Voice of Hispanic Marketing named Walmart the Marketer of the Year. The chain spent about $60 million on Hispanic marketing in both 2011 and 2012, and is doubling its 2013 multicultural advertising spend, with most of it going to targeting Latinos.

"Our Hispanic market spend is mirroring the growth in the Hispanic market," said Veronica Marshall, spokeswoman, Walmart, Bentonville, Ark.

Walmart's outreach to the U.S. Hispanic community is not new. But its increased spend is part of a sweeping initiative that has moved the chain to a strategy where everyone takes responsibility for multicultural marketing as opposed to a silo-like approach.

"Everyone from marketing to merchandising to operations is trying to reach the Hispanic shopper, making sure our advertisements are culturally relevant and that we have the right products in store," Marshall explained. "We want to reach them in the most authentic way possible."

Walmart also does a great job when it comes to measuring its Latino involvement, according to Roberto Orci, chairman of AHAA.

"It's no good to say something's a priority if you're not measuring it," he explained. "But Walmart can tell you store-by-store, day-by-day how they are doing. So when they say 100% of their business growth in the next 10 years will be multicultural, they are talking at the store level."

Having 170,000 Latino associates helps the discounter stay on target.

"Our associates are at ground zero in terms of serving the customers every day," Marshall said. "And many (associates) also are Walmart customers, so we look at our associates not only as the folks who work in the stores, but as folks who use our services and purchase the products in the stores."

Once a month Walmart also reviews business with its multicultural and business partners.

"Solutions can come from everywhere, and everyone has a voice and is part of the process," AHAA's Orci added.

Sears Holdings: "Sears champions diversity, but how do we do that? We don't mention it; we just do it," said Shannelle Armstrong-Fowler, spokeswoman, Sears Holding Corp., Hoffman Estates, III.

Sears gets it right through a triumvirate of essentials: the right messaging, the right products and the right in-store experience. Without all three coming together, the customer can't be fully engaged, Armstrong-Fowler explained.

Hispanic shoppers do not represent a single entity, the Sears spokesperson noted. They come from a number of different countries, and from several levels of acculturation. As a result, Sears keeps it simple.

"We have to be careful not to overly complicate this formula," Armstrong-Fowler said. "There are clusters [of nationalities], no different to what you find in any population. So we have an umbrella strategy, and the individual stores do things that are more targeted."

Sears also uses social media to target shoppers. (According to a study by uSamp, Hispanics participate in social media at a higher level than the general population.) Kmart launched Latina Smart, an online community dedicated to empowering Hispanic women. It now has more than 28,000 Facebook fans and nearly 2,500 Twitter followers. The initiative also includes a scholarship program for young Latinas and a 10-week paid internship at the corporate Sears office.

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